Statement of Cash Flows

The Statement of Cash Flows shows how cash moved in and out of your organization during a period, organized into three activity categories: operating, investing, and financing. It's the bridge between your Statement of Activities (which uses accrual accounting and includes non-cash items) and the actual change in your bank balance. Boards look at it to understand liquidity, and auditors use it to reconcile reported income with the cash footprint.

A nonprofit can report strong revenue on the Statement of Activities and still struggle to make payroll if the cash isn't actually arriving when it's needed. Grants often come in big lumps months after the work is performed. Pledges are recognized as revenue but don't become cash until they're paid. Depreciation reduces net assets without touching the bank. The Statement of Cash Flows strips all of that out and shows you what the bank account actually did during the period — which is, ultimately, the question a treasurer or executive director cares most about.

• Posted transactions covering the full period you want to report on
• Bank and cash accounts set up and reconciled to the period start and end dates

Running the report

1. Go to Reports > Cash Flows (in the sidebar).
2. Set the date range using the filter controls.
3. Optionally filter by fund, program, or fiscal year to narrow the scope.
4. Click "Apply" to generate the report.

Reading the report

NP Ledger presents cash flows using the direct method — it shows actual cash receipts and cash payments in each category, rather than starting from net income and backing out non-cash items. The report is organized into three sections:

Operating Activities — Cash received from unrestricted and purpose-restricted donors, grantors, program service revenue, and other mission-related income, minus cash paid for salaries, vendor bills, program costs, and other day-to-day operating expenses. This section answers "did our operations generate or consume cash?" A healthy operating nonprofit usually shows positive operating cash flow over the long run, though it's normal for individual periods to fluctuate with the timing of grants and payroll.

Investing Activities — Cash used to acquire or dispose of long-term assets like equipment, vehicles, or investments. Buying a new server shows up as a cash outflow here; selling an old one shows up as a cash inflow. For most small nonprofits, this section is small or empty in most periods.

Financing Activities — Cash received from loans and lines of credit and cash used to repay them, plus — uniquely for nonprofits — cash contributions that donors have restricted for long-lived asset acquisition or construction or for establishing or increasing a permanent endowment. Those two categories of restricted contributions are reported here rather than in Operating Activities, per ASC 958-230-45-2. If your organization doesn't borrow money and doesn't receive endowment or capital-project gifts, this section may be empty.

Below the three sections you'll see:

• Net change in cash — the total of all three sections
• Beginning cash — your cash position at the start of the period
• Ending cash — your cash position at the end of the period

The math works out: beginning cash plus net change equals ending cash. If operating cash flow is negative for the period, NP Ledger will flag it with a note — not necessarily a problem on its own, but worth a second look.

Exporting the report

1. Click "CSV" for a spreadsheet version.
2. Click "PDF" for a formatted document suitable for board packets and audit binders.

• Ending cash matches your bank reconciliation. If the report's ending cash figure doesn't tie to your reconciled bank balance as of the same date, some cash transactions may not be posted yet, or an un-reconciled item is in play. Run a bank reconciliation first if you haven't.
• Operating cash flow is where you expect it to be. A sudden swing from positive to negative may be explained by timing (a grant that arrived last year instead of this year) or may indicate an underlying budget issue worth discussing with the board.
• The three sections add up to the net change. This is a built-in identity of the report, but it's worth a glance for sanity.

• Confusing cash flow with net income. They are not the same thing. A nonprofit can show a surplus on the Statement of Activities while consuming cash, or run a deficit while generating cash. The Cash Flows report is the view that makes this distinction explicit.
• Treating negative operating cash flow as a crisis. It often isn't. A grant-funded organization that receives a large multi-year grant in Year 1 will show a huge operating cash inflow that year, and negative operating cash flow in Years 2 and 3 as the work is performed. What matters is the full picture across multiple periods.
• Running the report before reconciling. If bank reconciliations aren't up to date, the underlying cash movements may not be fully captured. Reconcile first, report second.
• Expecting this to show restricted vs. unrestricted cash. The Cash Flows statement shows total cash movement. To see how restricted dollars were spent, use the Fund Transactions report. To see the restriction classification of net assets at a point in time, use the Statement of Financial Position.

Accountant note: Per ASC 958-230, the Statement of Cash Flows is a required component of a complete set of nonprofit financial statements. NP Ledger uses the direct method of presentation, which lists actual cash receipts and payments in each category. Under ASU 2016-14, nonprofits that present using the direct method are no longer required to also provide an indirect-method reconciliation — that simplification is one of the key changes the ASU made to ASC 958-230. Two nonprofit-specific categorization rules to keep in mind: (1) contributions restricted for long-lived asset acquisition or construction, and (2) contributions restricted for establishing or increasing a permanent endowment, must be reported in Financing Activities rather than Operating Activities (ASC 958-230-45-2). All other donor contributions — including purpose-restricted and time-restricted operating gifts — are reported in Operating Activities.